What is an Early Redemption Charge (ERC)?

Nowadays, it is usual for most mortgage deals to have a relatively short life.

Fixed rate, Discount and Tracker mortgages might run for between two and five years, although it’s possible to find deals over 10 years. Whatever the term of the mortgage offer, if you decide to terminate the deal before it ends, you will probably have to pay the Mortgagee an Early Redemption or Repayment Charge (ERC) which, in most cases, is charged as a percentage of the loan.

These charges can add up to thousands of pounds so make sure you think carefully about how long you tie in for in the first place. We can help you find the right deal for your circumstances.

Additional to an ERC, there is another charge that might be payable under the terms of your mortgage. It is usually called an Exit Fee and it is a charge made by the lender for simply closing your mortgage account. This might be because you have decided to switch to another lender or remortgage to another deal with the same lender. But it can also be charged when you just finish paying off your mortgage.

When closing your account it is not unusual to be charged an exit fee, mortgage completion fee, deeds release fee or exit administration fee. At the time of writing these fees are usually between £50 and £200.

The Financial Ombudsman Service is an agency for arbitrating on unresolved complaints between regulated firms and their clients. More detail can be found on their website: www.financial-ombudsman.org.uk